Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals and expected performance relative to the benchmark index [44]. Core Insights - The report highlights that the profit growth of industrial enterprises has shown improvement, with April's cumulative profit growth rate rising to 1.4%, up from 0.8% in March, driven by a narrowing decline in profit margins [3][6]. - The analysis indicates a divergence in profitability across different sectors, with upstream mining continuing to be a significant drag on overall industrial profits, while the midstream equipment manufacturing sector has seen substantial profit growth due to export initiatives and supportive policies [4][5]. - The report emphasizes the cautious outlook of enterprises regarding future production and market conditions, as reflected in the slowing inventory growth [6]. Summary by Sections Industrial Profit Analysis - In April, the cumulative year-on-year growth rate of revenue for industrial enterprises was 3.2%, slightly down from 3.4% in March, while the cumulative profit growth rate improved to 1.4% [3]. - The report notes that the Producer Price Index (PPI) showed a cumulative year-on-year decline of 2.4%, indicating a "stable volume but declining price" scenario in the industrial sector [3][6]. Sector Performance - Upstream mining remains the largest drag on industrial profits, with most sectors experiencing negative profit growth except for non-ferrous metal mining [4]. - Midstream raw material manufacturing saw a significant decline in profit growth, dropping nearly 9 percentage points, while midstream equipment manufacturing experienced a substantial increase in profit growth due to favorable export policies [5]. - Downstream consumer goods manufacturing showed a slight decline in profit growth, reflecting weak consumer demand [5]. Future Outlook - The report anticipates that the easing of tariffs between China and the U.S. will lead to lower export costs and a recovery in external demand, which, combined with domestic policy support, could sustain profit growth in industrial enterprises, particularly in the equipment manufacturing sector [6]. - However, it also warns that price factors may continue to suppress profit margins, as indicated by the expanding decline in PPI, which reflects weak terminal demand and overcapacity issues [6].